U.S. Auto Sales Drop as Health Crisis Bites -- WSJ
April 02 2020 - 2:02AM
Dow Jones News
By Nora Naughton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 2, 2020).
A collapse of showroom traffic in March led to a big drop in
U.S. sales for major car companies in the first quarter,
illustrating how quickly the coronavirus outbreak has dented
business for one of the nation's largest industries.
Fiat Chrysler Automobiles NV reported a 10% drop in
first-quarter U.S. sales, saying strong results in January and
February were more than offset by the impact of the virus in
March.
General Motors Co. said its U.S. sales were down 7% in the
January-to-March period, citing similar reasons, while Nissan Motor
Co. reported a 30% drop in the first quarter.
Hyundai Motor Co.'s U.S. sales were off 11% for the first
quarter and Toyota Motor Corp. reported a nearly 9% decline.
Ford Motor Co. will release its first-quarter sales results
Thursday.
The weaker first-quarter results provide a window into what is
ahead for the U.S. car business as the outbreak continues to shut
down large parts of society. Analysts in recent weeks have rushed
to cut their U.S. sales forecasts, and executives and dealers
expected the sales declines to only deepen in April with a rebound
not likely until the summer, at the earliest.
"Consumers obviously and understandably shifted their
priorities," said David Kershaw, Nissan's U.S. sales chief. "The
situation is very fluid right now and everybody's trying to get
their arms around where and how this is going to play out."
Car companies already had been grappling with collapsing sales
in Europe and China as the virus spread around the globe earlier
this year. But new-car demand in the U.S. has held strong, all the
way through the first half of March, analysts and dealers said.
The turning point came midmonth, when buyers began steering
clear of showrooms to avoid interactions with others and possible
exposure to the virus. U.S. car factories went dark soon after and
many dealers have since temporarily closed their locations to
comply with stay-at-home orders.
For March alone, analysts are expecting sales to have decreased
by about a third compared to the same month last year. Toyota's
sales last month fell nearly 37%, while Hyundai's dropped 43%.
"This is a sign of things to come," said Jessica Caldwell, an
analyst with car shopping website Edmunds.com. "April is going to
be another tough month. It's going to be hard for any company to
move the needle."
Some retailers are trying to stimulate business by promoting
online sales and at-home delivery services, allowing buyers to
purchase a car without having to leave their homes. That has helped
some, analysts say, but the bigger challenge is customers are
delaying purchases altogether.
Auto makers, rushing to salvage business, have also responded by
reviving sales promotions used during the 2007-09 recession, such
as no-interest loans, delayed first payments and protection plans
that give buyers relief if they lose a job.
Fiat Chrysler on Wednesday said starting in April it will offer
customers 0% financing for seven years and deferred payments for
three months.
Those kinds of no-interest finance deals helped lift pickup
truck sales for the Detroit car companies in March, said Tyson
Jominy, a J.D. Power auto analyst. But it is unclear if such
promotions helped business more broadly because many were rolled
out late in the month.
One point of relief for the industry, dealers and analysts say,
is that while demand craters, nearly all U.S. factories have also
closed due to parts shortages orders and to curb the spread of the
coronavirus. That will help auto makers avoid unwieldy stockpiles
of unsold cars.
The U.S. auto industry entered the year with expectations that
vehicle sales, while slowing from a peak of 17.6 million in 2016,
would remain healthy. Now, some forecasters are predicting sales
could dip as low as 13.5 million in 2020 -- a level not seen since
2010 when the industry was only starting to emerge from the
financial crisis.
Dealers who remained open last month saw business nosedive as
buyers canceled appointments and avoided showrooms.
George Waikem II, treasurer of Waikem Auto Family, a dealership
chain in Ohio, said store traffic was off 60% last month compared
with February and he doesn't expect it to improve anytime soon.
"I'll be happy with 50% of what we did last year," he said, of
April. "Well, I won't be happy but that's what we're hoping
for."
--Ben Foldy contributed to this article.
(END) Dow Jones Newswires
April 02, 2020 02:47 ET (06:47 GMT)
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